On April 28, 2015, the U.S. Department of Education issued its final regulations on Maintenance of Effort (“MOE”).  The final rules cover many issues, including the methods that districts may select from to meet the eligibility and compliance standards with regards to funding sources.  These sources include: (1) local funds only; (2) the combination of state and local funds; (3) local funds only on a per capita basis; or (4) the combination of state and local funds on a per capita basis.  The final rules make clear that a district may choose any one or more of these funding sources in establishing eligibility and compliance, and State Education Agencies must permit districts to do so.  The Department also changed language in the eligibility and compliance standards to provide that the comparison year is the most recent fiscal year for which information is available.  It is important to note that the Department kept intact a district’s ability to take into consideration any exceptions or adjustments that a district took in a previous year or reasonably expects to take in the fiscal year being budgeted.  Further, in the final rules, the Department codified guidance it previously issued in 2012 in Letter to Boundy.  In Letter to Boundy, the Department stated that the level of effort required by a district that fails to meet its MOE obligations is the level of effort that it should have met in the prior year, and not the district’s actual expenditures.

 

The final rules take effect on July 1, 2015.  A copy of the final rules can be found in the Legal References-Rules and Regulations-Federal section of this website.

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